📢 5 STEPS TOWARDS WEALTH 🚀 The Indian Stock Market Way
HAVELLS: CMP: 1636 | Long Term: 15% | | Q2_FY25 Sales Gr: 16% | Q2_FY_25 Result Update
(Strong Revenue growth in continuity But Profits were down due to increased raw material cost)
#### *Company Overview*
Havells India Limited is a leading Fast Moving Electrical Goods (FMEG) company and a major power distribution equipment manufacturer with a strong global presence. The company operates in sectors such as Industrial and Domestic Circuit Protection Devices, Cables & Wires, Motors, Modular Switches, Home Appliances, Electric Water Heaters, Fans, Power Capacitors, and Luminaires for Domestic, Commercial, and Industrial Applications. Havells owns brands like Havells, Lloyd, Crabtree, Standard Electric, Reo and Promptec.
It was founded by Haveli Ram Gandhi, later sold to Qimat Rai Gupta who was his distributor. In 1983, it bought the loss-making Delhi-based Towers and Transformers Ltd and turned it around in a year. Between 1997 and 2001, Havells also bought ECS, Duke Arnics Electronics, Standard Electricals and Crabtree India. There was a 50:50 joint venture between Havells and the UK-based Crabtree, and Havells later acquired Crabtree's stake in the JV. In 2007, Havells acquired European lighting company Sylvania for about €200 million.
Havells acquired a 100% majority stake in Promptec Renewable in 2018. Havells sold 100% stake in Sylvania Malta and Havells Exim Hong Kong to Shanghai Feilo Acoustics for ₹1,070 crore. In February 2017, it acquired the consumer durables business of Lloyd Electricals at an enterprise value of ₹1,600 crore.
#### *Industry Overview and Outlook*
The electrical goods industry is poised for significant growth, driven by increased urbanisation, infrastructure development, and rising consumer disposable income. The government's focus on smart cities, electrification projects, and real estate development are expected to provide a substantial boost to the industry.
#### *Peer Companies*
Havells' primary competitors include companies like Bajaj Electricals, V-Guard Industries, Crompton Greaves Consumer Electricals, and Orient Electric. These companies compete across various segments of the electrical goods market.
### Historical Performance
- **Revenue Growth**:
*Fy_04:* Sales and Profit was 400 Cr and 20 Cr respectively, Price was 2.8.
*Fy_14:* Sales and Profit was 4700 Cr and 500 Cr respectively. (Business Grew >10X in 10 Years), Price rallied to185.
*Fy_23:* Sales and Profit was 17000 Cr and 1100 Cr respectively, Price rallied to 1200.
*Fy_24:* Sales and Profit is 19000 Cr and 1300 Cr respectively. (Business Grew >4X in 10 Years) Price is 1800.
We can say Company was able to grow strong from mere 400 Cr sales 20 Years back to 19000 Cr last year. We saw strong profit growth during the last 20 Years With high consistent profitability.
Hence, we saw the share (Valuations) rally 1000X which is 25% CAGR during the last 23 Years along with high & consistent dividends which are 5X of Initial investment.
### *Q1 FY25 Highlights*
Sales Growth:
Revenue from Operations: ₹10,345.52 crore for H1 FY25, compared to ₹8,734.13 crore in H1 FY24, representing a growth of 18.42% 📈.
💰 Profit Growth:
Profit Before Tax (PBT): ₹912.26 crore in H1 FY25, up from ₹717.37 crore in H1 FY24, representing a growth of 27.16% 📊.
Profit for the Period: ₹675.28 crore in H1 FY25, up from ₹536.15 crore in H1 FY24, reflecting a growth of 25.95% 🚀.
📊 Segmental Growth:
⚡ Switchgears: ₹1,128.09 crore in H1 FY25, up from ₹1,074.45 crore in H1 FY24 (+4.99%).
🔌 Cables: ₹3,326.39 crore in H1 FY25, up from ₹2,955.33 crore in H1 FY24 (+12.57%).
💡 Lighting & Fixtures: ₹782.62 crore in H1 FY25, up from ₹770.95 crore in H1 FY24 (+1.51%).
📱 Electrical Consumer Durables: ₹1,911.82 crore in H1 FY25, up from ₹1,610.58 crore in H1 FY24 (+18.71%).
🏠 Lloyd Consumer: ₹2,518.31 crore in H1 FY25, up from ₹1,808.32 crore in H1 FY24 (+39.29%).
🛠 Others: ₹678.29 crore in H1 FY25, up from ₹514.50 crore in H1 FY24 (+31.86%).
🌟 Important Highlights:
📈 Strong revenue growth driven by significant performance in Cables and Lloyd Consumer segments.
📊 Lloyd Consumer's recovery saw a substantial boost, reversing negative trends from prior quarters.
Profit margin improvement due to better cost management and operational efficiency 💼.
### Near Term Action:
We may see Havells have 15% sales growth but profits may fall to -1% profits growth this year. Current valuations are near 73 PE which if even we look at F_PE it is 81 which is high. We have been recommending Havells for a long time as a wealth creator. Those holding for a long time & have added during correction can add more during any fall near 1406 while next year target should be 2816 where some 5% profits can be booked. Overall, the multiyear rally candidate & can expect high consistent dividends from such a consistent company.
### Future Outlook:
Havells is well-positioned to capitalize on the growth opportunities in the electrical goods market. The company’s focus on innovation, efficiency, and expanding its product portfolio will likely continue to drive its growth. The ongoing infrastructure projects and rising urbanization in India provide a strong foundation for future revenue streams. Investors can look forward to stable and sustainable growth backed by Havells' strong market presence and strategic initiatives.
📢 Disclosure: This is for educational purposes and not financial advice. Please conduct your own research before investing.
